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Snapdeal raises $627 million from SoftBank
MUMBAI: In a move that makes SoftBank Corp the biggest investor in India’s third largest e-tailer, the Japanese telecom giant has agreed to invest $627 million in Snapdeal.
Multiple reports state that Snapdeal will use the investments in expanding its chain of fulfilment centres and make acquisitions in the coming months, specifically in the area of mobile technology. The company also plans to set up an incubation centre to harness start-up businesses in the mobile technology space within the next six months.
Snapdeal co-founder and CEO Kunal Bahl said that with the support of Softbank, the company is confident of further strengthening its “promise to consumers and create life-changing experiences for 1 million small businesses in India”.
Earlier this year, Snapdeal raised $133.77 million in a round led by eBay and $105 million from institutional investors including Temasek, Myriad, Tybourne, Blackrock Inc and Premji Invest. Tata Sons chairman emeritus Ratan Tata also made a personal investment in the company.
As per reports, SoftBank has highlighted India as a new priority in its aggressive expansion and is also leading a $210 million round of investment in an Indian logistics business in a separate deal.
SoftBank Corp chairman and CEO Masayoshi Sen said, “We believe India is at a turning point in its development and have confidence that India will grow strongly over the next decade. As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market.”
SoftBank also pledged an investment of $10 billion in India’s IT and communications space, one of the biggest investment commitments from a Japanese firm after Prime Minister Narendra Modi’s visit to the country.
The investment in Snapdeal is the largest in the sector since industry leader Flipkart raised $1 billion in July. Snapdeal has over 25 million registered users and over 50,000 business sellers, as per a statement by SoftBank.
The Snapdeal investment was announced alongside SoftBank Internet and Media Inc’s (SIMI) lead in a $210 million investment with existing investors in Indian transportation aggregator ANI Technologies Pvt Ltd. ANI operates Ola Cabs, a mobile application for cab booking.
SoftBank vice chairman and SIMI chief executive Nikesh Arora said, “India has the third-largest internet user base in the world, but a relatively small online market currently. This situation means India has, with better, faster and cheaper Internet access, a big growth potential.”
Arora will be joining both Snapdeal and ANI’s boards as part of the investment.
Morrison & Foerster LLP acted as legal advisor to SoftBank, with Kochhar & Co. advising it on legal matters.